Brown cracks down on cash advances left uncollected

Published 4:00 am, Wednesday, April 20, 2011

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Brown cracks down on cash advances left uncollected

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Gov. Jerry Brown ordered state agencies on Wednesday to do a better job collecting money after an audit discovered that 11 state agencies had failed to gather $13.3 million in debts, mostly from employees who received cash advances.

At issue are millions of dollars in salary or travel advances that were paid to employees and never recouped by the state. An audit issued by state Controller John Chiang in 2010 found that many departments were failing to collect this money, in some cases for years. The Department of Transportation was named the biggest scofflaw, with $3.2 million owed.

In a written decree Wednesday, Brown said state agencies "must regain control" of the revolving funds used to pay out such advances.

"It's shocking that the state has apparently failed to collect millions of dollars in salary and travel advances owed by state employees," Brown said. "This situation reinforces the worst stereotype of ineffective and inefficient government, and I have ordered state agencies to immediately investigate the backlog of uncollected debts and find every penny owed to taxpayers."

State employees are required to pay back all money advanced to them for trip expenses that isn't spent on state business. Salary advances are supposed to be taken out of future paychecks.

The governor ordered managers to clear salary and travel advances within 30 days and review revolving fund reports on a monthly basis. If salary and travel advances are not resolved within a month, the governor ordered state agencies to deduct the money from the employees' paychecks.

The announcement Wednesday follows previous executive orders issued by Brown that froze most state hiring, cut employee cell phones, reduced the state's vehicle fleet by half and halted the distribution of free gift items such as key chains and goodie bags. The cell phone and giveaway orders are expected to save around $23 million a year, while the governor's office has not put a price tag on the vehicle reductions and hiring freeze.

Brown's cost-saving orders are in many ways symbolic given how little the recouped money will affect the state's whopping $26.6 billion budget deficit, but it furthers an overall message of frugality being advanced by the Democratic governor.

Chiang, the controller, applauded Brown's "commitment to making every dollar count."

"The state's poor debt collection and accounting practices are fleecing public coffers at a time when vital public programs are being decimated by unprecedented budget cuts," Chiang, a Democrat, said in a written statement Wednesday.

Of the $13.3 million in outstanding advances that existed in 2009, $3.5 million had been owed for more than 60 days and as long as three years, according to Chiang's 2010 audit. An additional $543,000 had gone uncollected for more than three years.

Brown's office said the delays are problematic because after three years the state cannot collect a debt without an employee's consent. Consequently, the longer it takes, the less likely taxpayers are to recoup their money.

The Franchise Tax Board, which failed to collect $2.8 million, and the California Highway Patrol, which was owed $2.6 million, were just behind the Department of Transportation as the most lenient money collectors, the audit said.

State law allows advance payments to be made in a number of circumstances, including for travel, when checks are delayed, when an employee leaves their state job or when a vendor requires immediate payment.

Jacob Roper, a spokesman for the controller, said cash advances to employees are not the only problem.

"Our past audits have been quite critical of a number of collection practices," Roper said. "There are a number of examples where state departments need to do a better job of collecting what is owed. The governor is following up on our audit recommendation and solving the problem."

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